FRANCE AND TAXES

The dream of Kings, it is most people`s dream to live the French way of life, to be stress free and have a laid back life style where we too can take 2 hour lunch breaks and not rush from pillar to post.

Buying a property in France is not as difficult as it may seem. The notorious paperwork and contracts are all there to protect you and your family, as the government has to protect the public as it is a life changing moment when buying a house.

FRENCH TAXES

It may seem strange to some but the French tax on the profit of a house is far less than any other countries taxes

A typical example is the UK where you will have to pay 40% on a second home for the entirety of one’s life, but in FRANCE the French taxes are ZERO after year 15 which is on all properties in France.

HOW DOES IT WORK?

The maximum taxes which a non-resident would pay are 16% for the first 5 years excluding those initial NOTARY FEES and any renovation and construction cost.

Below I enclose 3 examples on someone buying a property for 100,000€ and selling the property for 200,000€.

Example 1 – Sold in year 5

• Profit on the said property is  100,000€.
• Let’s say you had no renovation works and in this case the government allows you 15% of the profit totaling 15,000€ credit.
• Notary FEES 7,000€.
• This leaves you with a net profit of 78,000€.
• After you have not had the house over 5 years you will pay 16% on the 85,000€

Example 2

We use the same profit of 100,000€

Let`s say you have not done any renovations, so the government allows you 15% which is 15,000€ credit

Notary FEES 7,000€

Your profit is the same 78,000€

Because you sold in year 10 you have 5 years at 10% per year totaling 50% credit leaving you with a net profit of 39,000€

You will pay 16% taxes on 39,000€

Example 3 - Sold After Year 15·

Let`s use the same profit of 100,000€

Renovation cost the same which is 15,000€

NOTARY FEE 7,000€ leaving a profit of 78,000€

As you have had your property for more than 15 years you get 10% per year for 10 years from year 5 to year 15 and have a ZERO tax return.

That is correct, buying French properties in France is an extremely profitable venture WHAT HAPPENS IF IT BECOMES YOUR MAIN RESIDENCE After 12 months it is TAX FREE

New Builds are slightly different as the French government do not want people making money from buying and selling so they so have placed a 5 year limit

This limit means that should you sell your NEW BUILD within 5 years you will have to pay TVA which is equivalent to the UK VAT.

After year 5 the rules given on other properties apply.

IMPORTANT

This information is only based on what taxes you would pay in France and has no baring on any taxes you might need to pay in another country, so you should seek independent advise from a tax specialist of your country as you may have some taxation to pay in that country.

However, if it is your intention to live in France as dose most people who buy properties in France, then you and become a resident so need not be paying taxes as illustrated above.